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Monday, February 08, 2016

Transforming the operational efficiency of tribunals and courts

Almost two decades ago in L. Chandra Kumar v. Union of India (1997), the Supreme Court had lamented that Indian tribunals function inefficiently since there is no authority in charge of supervising and fulfilling their administrative requirements. The Court had gone on to suggest that until a wholly independent agency for administration of all such tribunals is set up, it is desirable that all such tribunals should be under a single nodal Ministry. Finally, on January 18, 2016, a Constitution Bench of the Supreme Court in Madras Bar Association v. Union of India reportedly directed the Central Government to consider setting up a nodal body or agency for managing all tribunals across all Ministries.

In spite of pending tribunal reforms, Indian policy makers are heavily relying on tribunals to achieve the policy objective. For instance, the Insolvency and Bankruptcy Code, 2015 (IBC) recently introduced in the Lok Sabha envisages an efficient Adjudicating Authority which must dispose of matters within hard deadlines. The entire IBC is subject to this condition precedent. However, given the dismal performance of Indian tribunals, there are legitimate doubts as to how the DRTs and NCLTs will be able to achieve the ambition set out in IBC.

India needs to urgently reform its tribunal system. The Supreme Court's recent direction is a good starting point. This post explains the institutional reforms that would be needed to rachet up the performance of Indian tribunals.

Back-end institutions

Institutions are crucial to the development of a nation. Backward nations have poorer institutions. They may try to develop and yet consistently fail to improve their institutions. One usual reason for this is that these countries often try to adopt forms of other functional states and organizations which camouflages a persistent lack of function. This is the case with Indian judicial institutions. There is a general agreement in India on the desirable front-end features needed for tribunals (independence, efficiency, accessability, transparency, user-friendliness). These are visible features of any Western judicial institution and have been co-opted into the Indian context through legal transplant (by statute and case-laws). However, the back-end institutional systems supporting these front-end features in the West are neither readily visible to an outsider nor always possible to adopt by legal transplant (especially by case-laws). Therefore, there is an acute lack of awareness in India of what back-end institutional support systems are actually necessary to sustain these front-end features.

The key idea

Every judicial institution has judicial as well as administrative functions. In most advanced common law jurisdictions, the administrative functions are hived off into a separate agency with a corporate structure. This agency can take advantage of economies of scale and provide standardised administrative support services across courts and tribunals. Additionally, judges are freed from administrative burden and can fully focus on core judicial work. This simple yet critical institutional reform has enabled these countries to enhance the performance of their judiciary.

International best practice

UK has HMCTS which provides administrative support to its courts and tribunals. Canada has a similar agency set up under the Court Administration Service Act 2002; Australia has a similar agency set up under the Court Services Victoria Act 2014; US has a similar agency set up under the Administrative Office Act of 1939.

What are we doing in India?

In contrast, India does not have a similar agency for managing its courts and tribunals. Each tribunal has its own registry. They are administered by their respective sponsoring Ministries. Consequently, there is no standarisation of services across tribunals of different Ministries. Economies of scale are completely lost. In this overall flawed institutional design, blindly setting up more "fast-track" tribunals will not improve justice delivery. Instead, India should adopt the international best practice and set up a Tribunal Services Agency (TSA) to properly manage all the existing tribunals across different Ministries.

This idea is however not completely new in India. It has been discussed in rudimentary forms by the Law Commission in 1988 which suggested setting up of a National Judicial Centre. In 1997, the Supreme Court in L. Chandra Kumar (1997) suggested that until a wholly independent agency for administration of all such tribunals is set up, it is desirable that all such tribunals should be under a single nodal Ministry. Again in 2015, the FSAT Task Force led by Justice N.K. Sodhi (Chairman) and Mr. Darius Khambata (Vice-Chairman) also suggested incorporating a company to provide administrative services to tribunals in financial sector. And finally, on January 18, 2016, a Constitution Bench of the Supreme Court in Madras Bar Association v. Union of India reportedly directed the Central Government to consider the possibilities of setting up a nodal body or agency for managing all tribunals across all Ministries.

Recently, the Law Minister himself recognised concerns that tribunals are not working satisfatorily. However, the Central Government is yet to come up with a concrete plan on tribunal reforms.

Conclusion

In a recent Working Paper released by IGIDR, I argue that Indian policymakers should seriously consider setting up a TSA to support Indian tribunals including the ones under IBC. The detailed organisation design is also discussed along with board structure and financial arrangements.

The author is a researcher at the National Institute for Public Finance and Policy.

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